Entertainment

Twitter 2012: Bigger and More Ads

People predicted rioting when Twitter decided to post ads within its feeds. However, those protests never materialized. Instead, Twitter was used to mobilize protests in the streets in Egypt, Yemen and Tunesia.

The two instances are related. As Twitter became a globally recognized entity, it also began efforts to monetize itself earnestly in 2011. As previously mentioned, Twitter's successful introduction of advertising was one of the big social media marketing trends of the year. Despite warnings from some Twitter purists, users didn't seem to mind more ads on Twitter, perhaps concluding that Twitter was, after all, a for-profit business.

Growth Via Advertising

Though many perceived Twitter's 2011 ad rollout as an unalloyed success, eMarketer noted a few hiccups here and there. Twitter's international expansion took longer than promised, and a self-serve ad product didn't materialize until the end of the year — even then, for just a handful of advertisers.

Concerns aside, eMarketer is still bullish about Twitter's prospects in the coming year. The researcher reckons that Twitter will post $259.9 million in revenues in 2012, an 86.3% jump from 2011. Debra Aho Williamson, the author of the report, wrote that although Twitter has a smaller audience than Facebook, marketers have posted "solid engagement rates" with Twitter's ad products that outperform Facebook's in some cases. (That's fairly faint praise, however, since the click-through rates for Facebook are notoriously low. Facebook, however, has sought to reframe the argument by justly noting that CTRs are a poor measure of an ad's success.)

Twitter doesn't provide much transparency into its advertising performance, but some partners, notably EA, have touted an 11% engagement rate in the U.K. for a Promoted Trends campaign. Moreover, users don't seem to mind ad products like Promoted Tweets, according to research from Lab42.

The onrush of advertising to Twitter isn't just hype. It's rare that a day goes by in which Twitter's home page doesn't sport a Promoted Tweet, Promoted Trend or Promoted Account by one advertiser or another. Twitter doesn't divulge the pricing for such campaigns, but the Wall Street Journal pegged the price of a Promoted Tweet north of $100,000.

Now that the Twitter ad machine is up and running, the company is looking to expand its footprint. In September, Twitter opened a London office, its first international outpost for sales. That month, the company also began accepting political ads, broadening its variety of advertising.

With the company clearly on a growing path, the obvious question is whether an IPO is in the near future. Officially, at least, there are no such plans. "We can stay private and grow the business the way we want, as long as we want," CEO Dick Costolo told The Mercury News in December. "We never think about or talk about when we want to go public." (Twitter could not be reached for comment for this story.) Yet Twitter just bought a fancy new headquarters in San Francisco designed to accommodate far more than the company's current 700 or so employees.

Possible Complications

Of course, there was once a time when MySpace was the next big thing, and Second Life appeared to be the marketing platform of the future. Twitter seems to be on a tear at the moment, but alas, things change. Though it seems unlikely, there's a chance Twitter could jump the shark or experience a Netflix-like fall from grace.

How? For starters, Google+ could really take off and, realizing its SEO benefits, users and brands could begin focusing on the network more — at Twitter's expense. Likewise, Facebook's addition of subscriptions could usurp Twitter's role as a celebrity platform. More celebs could follow Ashton Kutcher's lead by leaving the tweeting to professionals, which would result in a duller experience all around. Brands, assessing the damage that Kenneth Cole and Chrysler suffered due to errant tweets, could decide it's time to cut losses and shutter their sparsely followed accounts. Finally, Twitter might simple expire like any other fad, as users move on to something else.

Another possibility is that Twitter could get acquired and change in a fundamental way. Imagine, for instance, that Google decided to buy Twitter and absorb it into Google+. The post-IPO Facebook could also be a buyer.

Crazy, you say? Remember that YouTube was once a separate company as well.

While the scenario is plausible, the idea of a new competitor or a group of competitors stealing Twitter's thunder seems far-fetched. Five years after its founding, Twitter is now a global brand name and a symbol of social media-enabled freedom. There simply will never be anything like Twitter again.

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